I received a refund on unclaimed property for a bad investment. Do I need to report this income?

If you reported a loss on this investment in a prior year then this income is reported.  See the steps below and the screenshot attached if you received a tax benefit from the original loss.

Tax benefit rule. You must  include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year.

• The income should be reported in the same way the loss was deducted or in the section that reduced income in the year the loss was taken on the return. To make this determination I have included Publication 525-Taxable and Nontaxable Income, for your review. The "Recoveries" section begins on page 23.

In TurboTax Premier follow these steps:

• Federal Taxes > Wages & Income > Other Less Common Income > Miscellaneous Income > Reimbursed Deductions From a Prior Year